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Surviving the price squeeze: Five simple ideas to help you beat the cost-of-living crisis

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Rising energy costs have forced almost four out of 10 people to cut back on heating or electricity and almost one in five people to cut down on other essentials

Rising energy costs have forced almost four out of 10 people to cut back on heating or electricity and almost one in five people to cut down on other essentials

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The cost-of-living crisis has become so serious that for many people it is now a case of eat or heat.

Rising energy costs have forced almost four out of 10 people to cut back on heating or electricity and almost one in five people to cut down on other essentials – such as food, according to a recent report by the Society of St Vincent de Paul.

“Fuel poverty is very much a reality now,” said Eoin Clarke, managing director of switcher.ie.

“Bills are so high that many families are turning off heating so they can afford food.” 

With rising living costs likely to be with us for some time yet and the Ukraine crisis likely to push fuel prices up even further, what can you do to better manage rising living costs if you’re already struggling to make ends meet or fear you soon could be? 

 1 KNOW YOUR CASHFLOW

“Get a better understanding and full knowledge of the money that’s regularly coming into your household – and the money that’s going out,” said Michelle O’Hara, regional manager for south Leinster’s Money Advice and Budgeting Service (MABS) – the state body that offers free advice to people in debt.

The money coming into your household might include salary, a pension and social welfare. The money going out could include grocery bills, transport costs, childcare fees, mortgage repayments or rent, electricity bills, entertainment costs, bin charges, mobile phone bills and so on . 

One of the best ways to find out what you’re spending your money on is to go through your bank and credit card statements – particularly if you largely pay for things electronically (such as by direct debit and debit card).

Another good way to track your spending is through a spending diary – where you record everything you spend your money on over a month.

“People often don’t realise how much they’re paying for something or that something costs as much as it does or that the price of something has gone up,” said O’Hara.

“We often set up direct debits for things, forget about them – and don’t realise that we’re still paying for them,” she said.

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 2 CUT OUT THE UNNECESSARY

Once you have an understanding of all the money coming in and going out of your household, you should know if you’re spending more than you’re earning – or if you’re just about getting by.

Should either be the case, cut out or reduce your discretionary spending – such as TV subscriptions, weekends away, meals out, takeaway coffees, weekly Lotto tickets, designer clothes and so on.

It’s important to prioritise essentials (such as your mortgage or rent, food, electricity, heating and medicine) when your household income is squeezed.

“One of the areas that can eat up a lot of disposable income is subscription entertainment services [such as video streaming services and TV subscriptions],” said O’Hara.

“These packages can be very expensive and the cost of them can increase. It’s always worth a phone call to your provider or another provider to see if you can get the same package for a lower price.”

Although it is always good to save money for a rainy day, the time to dip into any savings you have set aside – and to  put your savings on hold – is when you’re struggling to make ends meet.

Only use your savings to cover the cost of essentials though – and restart your savings when your finances improve.

DON’T PAY MORE TAX THAN YOU NEED TO

Check that you’re getting all the tax reliefs and allowances you’re entitled to if you’re working.

This could save you hundreds, perhaps thousands of euro in tax a year – and bring more money into your household.

“If you’re working, find out if you’re getting all of the tax credits available to someone in your circumstances,” said O’Hara.  

For example, you may be able to claim the Single Person Child Carer Credit (SPCCC) if you’re a single person who cares for a child on your own. The SPCCC tax credit is worth €1,650 per year and will reduce the amount of tax you pay by €31.73 per week.

“In addition, the amount of money you can earn before getting hit for the higher rate of income tax is increased from €36,800 to €40,800 – if you’re in receipt of the SPCCC tax credit,” said O’Hara.

For parents who are married or in a civil partnership, the home carer tax credit can reduce the amount of tax paid by the family and thereby boost the household income coming in.

The home carer tax credit – which is worth €1,600 – would be available if one of the spouses or civil partners is a stay-at-home parent and the couple are jointly assessed for tax.

Furthermore, the stay-at-home spouse or partner could earn up to €7,200 a year and still qualify for the full tax credit.

Where both spouses or civil partners are earning however, the couple should note they cannot claim both the home carer tax credit and the increased tax rate band (which allows married couples who are both working to pay the standard rate of income tax on up to €73,600 of income, rather than on up to €45,800  if only one spouse is working).

It may be more beneficial for a dual income couple to forgo the home carer tax credit and claim the increased tax rate band instead.

Other valuable tax breaks which could put more money back into your pocket  include the tax relief on health expenses (where you can get 20pc tax back on the cost of certain medical expenses and 40pc tax back on nursing home expenses), and flat-rate employment expenses (tax relief you can get to cover the cost of expenses incurred when carrying out your work).

Flat-rate employment expenses could be worth a few hundred – and in some cases, a few grand – to you a year. 

BOOST YOUR INCOME

If you are working, try to secure a pay rise from your boss. You must be able to argue your case if seeking a pay rise so find out what people in similar jobs and with similar experience to you are getting paid.

Outline to your boss what you’re delivering for the company – and why you believe that contribution merits  a pay rise. 

Doing some freelance work on top of your main job could be another way to earn a bit more cash.

Those whose only source of income is social welfare should get in touch with their local Citizens Information centre to check they’re getting all the social welfare they’re entitled to and that they’re on the most beneficial social welfare payments for someone in their circumstances. You don’t have to be out of work to get social welfare.

You may be entitled to the working family payment if you’re a low-paid employee with at least one child – as long as the child normally lives with you or is supported financially by you.

“Sometimes a base social welfare payment will unlock your entitlement to other payments,” said O’Hara,

“With the working family payment, you may become entitled to the Back-To-School Clothing and Footwear Allowance (which helps meet the cost of uniforms and shoes for children going to school) or the Back-to-Work Family Dividend (which offers financial support to those moving from social welfare to employment) for example.”

Other social welfare you may be entitled to include the fuel allowance (which helps with the cost of heating during the winter months) or the exceptional needs payment (which helps with an essential, once-off cost – such as fuel bills – that you cannot meet out of your weekly income).

Note that under the Government’s latest cost-of-living package, those in receipt of the fuel allowance will get an extra one-off payment of €125 early this month.

Another avenue  which you could explore to generate more income – whether you’re working or not – is to rent out a room in your home. You can earn up to €14,000 a year tax-free by renting out a room in your home or by hosting a foreign student in your home – as long as you meet the conditions of the Revenue Commissioner’s rent-a-room relief scheme.

Selling second-hand items through the likes of donedeal.ie, adverts.ie, 
Depop and eBay can also help generate extra cash.

5 REACH OUT

“If you’ve been having difficulty paying your energy bills and it’s a case of heat or eat, contact your energy supplier as it should be able to offer a solution,” said Eoin Clarke.

“Don’t let two billing cycles build up and be in a state of disarray. In some instances, your energy supplier will make sure you’re on the cheapest rate.

“Your supplier might also put a credit meter into your home.”

Credit meters are electricity or gas meters which you top up with credit and then pay for your energy as you go – rather than having a bill arrive at the end of the month.

Although these meters can help some households better control their energy usage, the cost of electricity and gas is often more expensive than it is with standard post-pay bills. You may also need to pay a service charge with a credit meter.

Seek help from MABS (0818072000 or visit mabs.ie) if you have fallen behind on bills or would like advice on how to better make ends meet.

“When people realise they have or will fall behind on bills, that can have a stark impact on an individual and sometimes they will retreat rather than do something proactive,” said O’Hara.

“Retreating could be ignoring the issue or not opening bills. Understand that you can overcome the position you are in – with the correct supports.

“It’s never too late [to sort out a problem] – even if it has spiralled out of control. MABS can negotiate with your creditors on your behalf.

“Or if you’ve a reasonable income coming in but find things are always tight, we can help with your budget.”


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